Real-World Economics Review

from Lars Syll I’ve never yet been able to understand why the economics profession was/is so impressed by the Arrow-Debreu results. They establish that in an extremely abstract model of an economy, there exists a unique equilibrium with certain properties. The assumptions required to obtain the result make this economy utterly unlike anything in the real world. In effect, it tells us nothing at all. So why pay any attention to it? The attention, I suspect, must come from some prior...

from  Norbert Häring and current issue of RWER On 2 October, the European Central Bank (ECB) announced in a press release that it intends to intensify its work on a digital euro. The ECB enumerated three scenarios under which it might want to issue a digital euro: (i) a sharp decline in the use of cash, (ii) “he launch of global private means of payment that might raise regulatory concerns and pose risks for financial stability and consumer protection” (read: Libra), and (iii) a broad...

from Dean Baker and Arjun Jayadev On Monday, we, along with Achal Prabhala, had a column in the New York Times arguing in support of a resolution put forward before the WTO by India and South Africa, which would suspend intellectual property rights related to vaccines and treatments during the pandemic. The main point is that these rights are slowing the diffusion of life-saving medicines in a crisis. Furthermore, since much or all the cost of developing these vaccines and treatments were...

from Jayati Ghosh It was a long time coming, but the day of reckoning for the big digital companies may finally have arrived. Despite the growing monopoly power of big tech and their use of anti-competitive practices, earlier attempts to regulate them (such as an attempt by the U.S. Department of Justice in 1998 to rein in Microsoft) had only limited success. The novel coronavirus pandemic further enhanced the monopoly power of the big tech giants. Timeline and actions But now, a rash of...

from Lars Syll In physics, we have theories and centuries of experience and experiments that show how gravity makes bodies move. In economics, we know there is nothing equivalent. Mainstream economists necessarily have to load their theories and models with sets of auxiliary structural assumptions to get any results at all in their models. So why then do mainstream economists keep on pursuing this modelling project? Mainstream ‘as if’ models are based on the logic of idealization and a...

from Asad Zaman I was overwhelmed by the level of ignorance displayed by distinguished economist Raghuram Rajan in his article entitled “How Much Debt Is Too Much?” published recently in Project Syndicate on Nov 30, 2020. I had meant to write a critique of the article, but to do so requires starting from the very beginning. In this post, I go over some basic MMT concepts, in order to prepare the ground for this critique. There are now many good videos explaining these basics. I will go...

from  Nikolaos Karagiannis and current issue of RWER “. . . The practical use of the term “neoliberal” exploded in the 1990s, when it became closely associated with two developments. One of these was financial deregulation, which would culminate in the 2008 financial crash and in the still-lingering euro debacle. The second was economic hyper-globalization, which accelerated thanks to free flows of finance and to new, more ambitious types of trade agreements. Financialization and...

from Lars Syll Causal inferences can be drawn from nonexperimental data. However, no mechanical rules can be laid down for the activity. Since Hume, that is almost a truism. Instead, causal inference seems to require an enormous investment of skill, intelligence, and hard work. Many convergent lines of evidence must be developed. Natural variation needs to be identified and exploited. Data must be collected. Confounders need to be considered. Alternative explanations have to be...

Please click here to support this open access journal and the WEAsubscribe to the RWER download whole issue                                                leave comments here Alarm. The evolutionary jump of global political economy needed Hardy Hanappi 2 Neoliberalism must die because it does not serve humanityNikolaos Karagiannis 27 Climate arsonist Xi Jinping: a carbon-neutral China with a 6% growth rate?Richard Smith 32 All the good things a digital euro could do – and all the bad...

from Peter Radford There is a new eBook published by the Stigler Center which is an offshoot of the Booth Business School at the University of Chicago.  The publication contains a number of short essays either attacking or defending the infamous pronouncements by Milton Friedman on the role of the corporation.  This year, you may recall, is the 50th anniversary of the newspaper article in which Friedman described his view that the purpose of the corporation is too maximize shareholder...